GBP/INR is trading in sideways early on Tuesday, though the pair continues to point downwards. The quotation is currently displaying no change at 92.096 as of 7:05 AM UTC. The volumes are decreasing as the UK markets will close early on Christmas Eve. Yesterday, the pair updated the December low, and it might do this again later today.
The pound is under pressure as investors are worried about a potential no-Brexit deal after UK Prime Minister Boris Johnson rule out any attempt to extend the exit transition period, which is set for December 2020. It means that the UK will have to reach a trade deal with European leaders within 11 months after January 31, 2020, when Brexit will likely occur.
Elsewhere, the rupee is backed by improved sentiment over the US-China trade deal. However, the currency cannot enjoy a rally as the Indian economy has been struggling for months.
Yesterday, the International Monetary Fund (IMF) said that the Indian government must act quickly to reverse the slowdown. The international organization cited declining consumption and investment, along with falling tax revenue, as the main factors that impede the growth acceleration.
Ranil Salgado, an executive at IMF Asia and Pacific Department, said:
“India is now in the midst of a significant economic slowdown. Addressing the current downturn and returning India to a high growth path requires urgent policy actions.”
The IMF warned that the government had limited room for boosting spending to back economic growth, especially amid high debt levels.
Salgado noted that the Reserve Bank of India (RBI) had “room to cut the policy rate further, especially if the economic slowdown continues.”
In October, the IMF cut its forecast for 2019 by almost a full point to 6.1%. It slashed the outlook for 2020 to 7.0%.
Last week, IMF chief economist Gita Gopinath said that India’s economic slowdown had “surprised to the downside.” She added that the fund was about to downgrade its growth forecast for India in the World Economic Outlook which is scheduled to come out next month.